European Union leaders are under intense pressure to make a pivotal decision on funding Ukraine's defence using billions in frozen Russian sovereign assets. The critical choice will be central to a high-stakes summit in Brussels on Thursday.
Pressure Mounts for Decisive Action
At a time of unprecedented pressure from the United States, EU member states are being urged to back a substantial €90 billion loan for Kyiv. This comes as Ukrainian forces face relentless pressure on the battlefield, with Russia making incremental advances. The European Commission President, Ursula von der Leyen, set the tone on the eve of the summit, telling the European Parliament that supporting Ukraine's defence was the most important act of European defence. "The next days will be crucial in securing this," she warned, describing the world as "dangerous and transactional."
Von der Leyen has proposed two primary options to cover Ukraine's urgent defence and civilian needs for 2026 and 2027:
- Joint borrowing by the EU.
- A "reparations loan" secured directly against the €210 billion in immobilised Russian central bank assets held within the bloc, primarily in Belgium.
Legal Fears and Political Divisions
However, the path forward is fraught with legal and political obstacles. Belgium, which hosts most of the frozen Russian funds through the Brussels-based securities depository Euroclear, has expressed deep reservations. It fears being left with a multibillion-euro bill if the scheme fails and member states do not provide guarantees. These concerns were amplified this week when the Russian central bank announced it was seeking $230 billion in damages against Euroclear.
Italy has emerged as a key sceptic. Prime Minister Giorgia Meloni argued that using the frozen assets without a solid legal basis would hand Moscow "the first victory since the start of the war." Both Italy and Belgium favour the alternative of joint EU borrowing as a safer mechanism.
In contrast, Germany's Chancellor, Friedrich Merz, is championing the plan to make the Russian assets "usable for Ukraine's defence." He stated the €90 billion sum could finance the Ukrainian army for "at least another two years" and send a powerful signal to Vladimir Putin. Merz acknowledged Belgium's worries but insisted the Commission's proposal was in full compliance with international law.
The Road to a Majority Decision
EU officials involved in the summit preparations suggest the reparations loan is the only viable option. Using the EU budget as collateral would require unanimity, which is impossible due to Hungary's hostile stance towards Ukraine and its promised veto. The reparations loan, however, would only need a qualified majority of member states.
The EU recently used emergency powers to indefinitely freeze the Russian assets, preventing a veto from Hungary or other Kremlin-friendly governments when sanctions come up for renewal every six months. Belgium has suggested these same powers could be used to generate a loan secured against the budget, but other nations have dismissed this as a legal overreach.
As leaders converge on Brussels, the fate of a major financial lifeline for Ukraine hangs in the balance. The outcome will test European unity and its commitment to countering Russian aggression through economic means.
